According to its latest results, the firm said that the fall in lifetime mortgage advances was due to a “decline in demand as a result of higher interest rates”.
The company added that throughout the period it had “maintained pricing and underwriting discipline”.
Within the L&G Retail division, which covers savings, protection, mortgages and retirement, it reported an operating profit of £408m, which is a two per cent fall on the prior year.
The division said that insurance operating profit in 2023 was £436m, which is a 22 per cent increase on 2022, which it attributed to “ongoing profit releases in the UK and US”.
However, total operating profit for the division was down due to a lower contribution from the fintech business, as “valuation uplifts” seen in 2022 did not occur again.
Retail and group protection see uptick
Regarding UK retail protection, the company said that gross premium income had risen to £1.5bn, up from £1.48bn last year.
It continued that new business annual premiums came to £150m in 2023, down from £171m in 2022, but said that the sector “remained a highly competitive market”.
The company said that it was still a “leader” in this sector, with a market share of 18.4 per cent, and offered point-of-sale (POS) underwriting decisions to over 80 per cent of its customers.
Looking at UK group protection, gross premium income increased 12 per cent to £479m year-on-year (YOY), which it said was due to “good retention” and new business annual premiums of £121m. The latter is an increase from £107m in 2022.
L&G said that its online “quote and apply” platform for smaller schemes “continues to perform well”, processing circa 900 new clients over the year, up from 600 last year.
It continued that group protection saw 2,929 income protection scheme members return to work during the year.
Build to Sell and Affordable Homes businesses perform well
L&G Capital’s Build to Sell business, Cala, performed well in 2023, the company said, in spite of a “challenging market”.
It said that it was the 10th-largest housebuilder in the UK by revenue, and it sold 2,917 units in 2023.
This delivered a revenue of £1.3bn and profit before tax of £112m.
“Cala’s performance was good compared to the wider market, with sales rates remaining stable over 2023 and close to our long-term norm. Reservations on private units currently stand at 43 per cent of the full year, providing confidence in H1 2024 revenues,” it added.
L&G continued that its Affordable Homes business had a total operational pipeline of 7,464 units and a gross asset value of around £1.2bn.
“The business is well-placed to create assets that provide robust, inflation-linked income for both our annuity portfolio and, increasingly, third-party investors,” it added.
‘We are on course to achieve our five-year targets’
António Simões, L&G CEO, said: “Everything I have seen since joining the business in January has confirmed what attracted me to Legal and General. We have an authentic sense of purpose and stand out for our market-leading businesses, performance track record and strong balance sheet, delivered by talented colleagues.
“Our 2023 performance reflects these strengths. We are on course to achieve our five-year targets, and demonstrated resilience in challenging markets to achieve record new business volumes in pension risk transfer, UK annuities and US protection, increasing our store of future profit.”
The five-year targets include cumulative Solvency II capital general of £6.8bn, cumulative dividends declared of £4.5bn, cumulative net surplus generation over dividends of £800m and dividend growth of five per cent by the end of 2024.
He continued: “Our international assets under management and alternative assets portfolio continue to grow, as does our position in the UK defined contribution pensions market.
“We must be as ambitious for Legal and General’s future as we are proud of our history. This is the right moment to take a fresh perspective, build on our track record and set out a vision for profitable and sustainable growth.”
“I look forward to outlining our strategy and plans at our Capital Markets Event on 12 June.”
